These are comments I read on a blog. They reflect the typical view of the media. "The problem for policy makers is that large portions of the electorate are starting to realize that a weak dollar is not simply a problem for those who vacation in Paris. People innately understand that a falling dollar is adding to the cost of living. So there are very strong political reasons for the Fed and the Treasury to talk tough on the dollar.
I believe it is exactly the opposite. The policies of our politicians are wrong and are causing inflationary pressures to rise across the board and productivity to decline. Rising inflation is creating economic uncertainties and enormous confusion on what should be done. International investors, as a result, sell their dollar denominated assets and invest their money in other countries.
The painful decline of the dollar reflects these uncertainties created by rising inflation. What I am saying is that inflation, our waning purchasing power, and weak economic conditions are causing the dollar to decline.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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